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By David J. O'Brien

The short answer is NO – we have some work to do. 

To get over the hump, we must first show that smart grid is more than a fad, more than a next-generation utility rate base. We must show that it is the basis for an entirely different electric grid and an entirely different utility business. 

In the 90s, it became clear that the Internet had real lasting power, that the notion of eBusiness did mean something tangible – namely, a new business model based upon quantum leaps in productivity.  Once the Internet was shown to have real value in new products, applications, lower costs and higher profits, it gained real respect.  

The same is true with the smart grid. It comes down to lasting value – value that outstrips the need for federal grants and becomes part of a new way of doing business (and a new way of living our lives).

Putting the stimulus into perspective

The federal stimulus was tremendous for the smart grid sector. It sparked billions in capital investment and the deployment of millions of new digital meters.  But we will be wise to put the stimulus era into perspective. It is one thing for utilities to defend an investment to regulators when fifty cents on the dollar is subsidized. It is another thing entirely when the total bill will be put into retail rates.

I suspect the architects of the smart grid stimulus hoped that it would create an inflection point. That the scale of investment, the lessons learned and the "whetting of the collective appetite" would place the industry on a sustained growth path. 

Unquestionably, the stimulus spend brought smart grid technology and consumer engagement to millions of customers.  However, we still do not have a sustained business model that can garner broad regulatory support. A business model that 1) delivers superior operating performance (lower costs, higher customer satisfaction, higher load factors, etc.), 2) made possible via game-changing functionality, and 3) supports a performance-based regulatory construct.  Bottom line: we need net present value (NPV) that can be put on the record and withstand scrutiny.